Answer Happy

TUDS VICTOeconomTICS 2. A statistician has collected data on Mike's consumption of donuts d and fruitf, for various prices. Mike has an income of £40. The following table shows Mike's optimal choices of donuts (d") and fruit (1") observed under various price combinations. Unfortunately, the statistician has lost the portion of the data that shows the prices of donuts. d* Price scenario A B 10 Price of donuts (pa) ? ? ? Price of fruit (pt) £2 £2 £2 f* 10 10 5 С 4 10 a. The statistician has found an extra piece of data that may be useful Under price scenario A, if Mike were to only buy donuts, he could afford 20 donuts. Under price scenario B, if Mike were to only buy donuts, he could afford 10 donuts. Under price scenario C, if Mike were to only buy donuts, he could afford to buy 8 donuts Fill in the second column of the table, working out the price of donuts under each scenario [10 marks] b. Draw Mike's demand curve for donuts, carefully labelling all relevant points and axes [10 marks] c. What is the consumer surplus loss associated with the price movement from scenario A to scenario B? [5 marks] d. The statistician collects data on Mike one year later and finds that Mike's demand for donuts is now perfectly elastic. He buys donuts at the current price of £3. The government introduces a sugar tax which raises the price of donuts to £4. Draw Mike's new demand curve for donuts. What is Mike's consumer surplus loss from the sugar tax? [5 marks] 100% 19°C Mostly cloudy 01 1:20 PM 5/16/2022